Can Teachers Afford a Home in the Nation’s Largest Metros?

Tendayi Kapfidze

Tendayi Kapfidze is Chief Economist at LendingTree. He leads the company’s analysis of the U.S. economy with a focus on housing and mortgage market trends. Tendayi utilizes data analysis to be a resource for both consumers and...

According to recent statistics from the U.S. Department of Labor, there are around 4.2 million preschool, primary, secondary and special education teachers in the United States, making teaching one of the most popular careers in the country. Teachers are also among the most trusted professionals in the nation, with at least 60% of Americans placing high or very high degrees of trust in both grade and high school teachers.

That makes it no surprise that teacher pay is a hot-button issue for many Americans.

With that in mind, LendingTree, the nation’s largest online loan marketplace, asked whether or not teachers in the nation’s largest metropolitan areas are paid enough to be able to afford a home. What we found is that, assuming they can afford to dedicate around 28% of their income toward housing, most teachers are paid well enough to be able to buy the median-priced home in their area.

Key findings

In 46 of the nation’s 50 largest metros, teachers in the nation’s largest metros can afford to buy the median-priced home in their city. Assuming a teacher can afford to spend 28% of their annual salary on a home, then they shouldn’t have too much trouble paying for a house in most of the nation’s largest metros. Our data shows teachers can afford to spend about $431 more on a home than they would need to buy a median priced home.

Teachers from the Buffalo, N.Y., Pittsburgh and Detroit areas will likely have the easiest time affording a home. On average, teachers in these areas can afford to spend a little over $1,000 more a month on housing than what would be required to buy a median-valued home.

San Jose, Calif., San Francisco and Los Angeles are the metros where home affordability would be hardest for teachers. In these metros, a teacher would need to shell out an average of $985 more than what they could comfortably afford in order to buy a house.

While homes in many of the nation’s metros might look affordable to the average teacher, it is important to remember that teachers are often saddled with things like massive student loan debt and other monthly expenses related to their job. For example, those who earned a master’s degree in education graduated with an average loan debt of $50,879 in 2012. This debt load could require hundreds, if not thousands, of dollars in monthly loan payments each month, which can severely limit the amount of money left over for home costs. As a result, many teachers may struggle to allocate 28% of their salary to a home, regardless of what their salary is.

Most affordable metros for teachers

No. 1: Buffalo, N.Y.

Median home price: $135,000

Average teacher salary: $71,960

Likely monthly payment for a median priced home: $554

Affordable monthly payment for the average teacher: $1,679

Monthly payment surplus: $1,125

No. 2: Pittsburgh

Median home price: $142,100

Average teacher salary: $68,060

Likely monthly payment for a median priced home: $583

Affordable monthly payment for the average teacher: $1,588

Monthly payment surplus: $1,005

No. 3: Detroit

Median home price: $149,900

Average teacher salary: $67,710

Likely monthly payment for a median priced home: $615

Affordable monthly payment for the average teacher: $1,580

Monthly payment surplus: $965

Least affordable metros for teachers

No. 1: San Jose, Calif.

Median home price: $815,000

Average teacher salary: $79,450

Likely monthly payment for a median priced home: $3,342

Affordable monthly payment for the average teacher: $1,854

Monthly payment deficit: $1,489

No. 2: San Francisco

Median home price: $716,500

Average teacher salary: $77,720

Likely monthly payment for a median priced home: $2,938

Affordable monthly payment for the average teacher: $1,813

Monthly payment deficit: $1,125

No. 3: Los Angeles

Median home price: $537,000

Average teacher salary: $79,760

Likely monthly payment for a median priced home: $2,202

Affordable monthly payment for the average teacher: $1,861

Monthly payment deficit: $341

Some teachers may still struggle with home affordability

While it appears as if the average teacher can afford a home in most of the nation’s largest metros, it is important to note that the results of this study do not necessarily apply to every teacher. In fact, there are numerous factors that could prevent a teacher from being able to afford a home, regardless of their gross salary.

For example, the majority of public school teachers (57%) have an advanced degree beyond a bachelor’s. This could mean that they have to spend several hundred dollars a month on paying off their student loans. This, coupled with the fact that many teachers are forced to pay out-of-pocket for things like classroom supplies, may make it very difficult for many teachers to allocate 28% of their income toward housing.

That being said, there are several debt relief and forgiveness programs that teachers can take advantage of, as well as some programs that can help them save on the list price of a home. Beyond that, as teachers grow in their careers, most should see their debt burdens diminish as their salaries increase. Therefore, while homeownership may be a challenge for some teachers, especially those who are just starting out, many, if not most, should still be able to afford a home at some point in their lives.

Methodology

When determining whether or not a home is affordable, we assume that a teacher will be able to afford a 20% down payment on the medium home value in their area, and that they will receive a mortgage loan with a rate of 4.6% (the average rate offered to Americans). By using that data, we calculated the likely monthly payment and down payment for a median priced home in a given metro.

We calculate an “affordable” monthly mortgage payment based on the “28% rule,” which says that a person should not spend more than 28% of their yearly gross salary on yearly costs related to housing. This rule, while not necessarily applicable to everyone, is useful for homebuyers to keep in mind, as it helps to ensure that they are not overspending on their home and leaving too little money for other expenses.

By subtracting the monthly housing payment that is affordable to a teacher from the calculated housing payment that would be required to purchase a home valued at the median level, we are able to determine whether or not the average teacher can afford to purchase a home in the metro that they live in.

The data on median home values used in this study comes from the 2017 American Community Survey (the most recent survey available at the time of writing). The average teacher salaries reported in this article are also from 2017 and taken from the Bureau of Labor Statistics.